The information provided on EL7.AI is for educational and informational purposes only and does not constitute financial advice.
The information provided on EL7.AI is for educational and informational purposes only and does not constitute financial advice.
Sign in to access this content
Sign InTraders in US futures and options markets have aggressively pivoted their outlook, moving from pricing rate hikes in 2027 to betting on a prolonged easing cycle. The SOFR spread between December 2026 and December 2027 has inverted to -8 basis points, signaling market conviction in a deeper cutting path. Open interest in SOFR December 98.00 calls has surged past 400,000 contracts, indicating significant bets that the Federal Reserve's policy rate will drop to 2%. This shift marks a sharp reversal from previous expectations, as concerns over persistent inflation are being replaced by the perceived need for long-term monetary support. The emergence of such a dovish trajectory is expected to weigh on Treasury yields and the US Dollar while providing a tailwind for Gold and fixed-income assets.